There is going to be a price adjustment in the oil market but nobody knows when it is going to happen

23 march 2016
| Kommersant

Early March saw the first delivery of Iran oil to Europe after the lifting of the sanctions. This means that the Russian plan to effect a price adjustment in the oil market by getting the majority of oil exporting nations to agree to put a cap on oil production at this January’s level has effectively fallen through. However, is Iran’s decision not to limit its own production that much of a big deal for the market?

Leonid GrigoryevChief Adviser to Head of the Analytical Center

The Kommersant newspaper writes that in the near future Iran
can hardly be regarded as a player that can have a significant impact on oil
prices. Especially if you take into account the consensus of some economists
that the situation in the oil market is moving towards a new price equilibrium.
This is going to be happening primarily through the natural process - by
cutting back on investments in production. “We are already seeing that just
about 650 derricks are operating on US shale deposits as opposed to 2,000 that
were in operation before. This means that a price adjustment in the market is
inevitable. The thing is nobody knows when it is going to happen and what the
new price is going to be,” Leonid Grigoriev, advisor to the Head of the
Analytical Center, told the Kommersant.

Nevertheless, Reuters says some OPEC members believe that an agreement to
freeze oil production can only be realistically achieved if Iran agrees to
participate.000